Land Use Feasability

[Joshua Bennett]

How often do buyers/developers need or use a land use feasibility company? I have some background in zoning, critical areas, etc. and also know a good number of real estate agents who tell me they could use someone that does land use feasibility studies for some potential clients, and I am going to open my own company that does this.

[Barry Ruby]

Colton, there are two ways a site comes to my attention. I actively look for it, or it somehow "finds" me. If I am looking for a site, I typically have a use or uses in mind for it (I want to build a shopping center, a MF or SF BTR project). If the site finds me (a broker or owner presents it to me the site suggests it uses.

In either event, the first step that I take to determine its future uses is to ascertain its current zoning. I then find out if any improvements that I have in mind can be executed based on its current siting: if it's in a county, can it it be built in that county or must it be annexed into the proximate city or town? I also find out if the zoning authorities has a long range master plan completed or "in the works". If so, I compare what I want to do with the property to the vision and views of the long range plan.

If my development concept does not conform to the permitting authorities plans, I generally see my intended development as being a hard sell and elect to find a site that works with the general area development plans.

Determining the Highest & Best Use once and if you have reason to believe the site can be used for your general purposes is another story.  Any such work requires a very robust analysis that uniformly includes sensitivity assessment of RISK. Variables that include: Time, interest and cap rates, hard & site cost, material and labor cost and competition.  

The two largest unknowns when doing early pro forma analysis are site and hard cost. Site cost can be established early on by having a few site plans and a civil engineer handy to give set quantities that can be priced with a site contractor. Hard cost can be established by doing residual comp analysis using current new for sale product that approximates what you want to build and can be refined with a General Contractor.

Talking with Brokers and city planning folks all the way through the due diligence process is highly recommended, Having a very robust Development Pro forma to feed first guesses and refined data into is a must. It will or should easily tell you everything you need and want to know about performance on the Project and Stakeholder (Investor/Developer) levels.

Please let me know if this answers your question or if I can help in any other way.